Topic: Does anyone notice the "investment cost" ? - page 3. (Read 338 times)

If $100k was your target when investing, then you can sell at that point. The essence of my first post was that buying and selling with no target range of profit you want to get or target range of loss you cannot absorb. is almost the same as pumping and dumping a coin.

- Jay -

Well this is a very shallow thought in my opinion, the first thing to know about investing and investors is the risks that come with it, you can not be successful by trying to avoid them.

Also this doesn’t mean you should be blind folded and then jump at a risk. You can actually read the market and if that’s the case I believe Bitcoin isn’t as risky as other coins, and it’s best to be a long term holder on Bitcoin because the chances of gains are high.

In my opinion, it is a very bad strategy to sell at a low price ($20,000) and then re-buy an asset that has already doubled in price ($40,000).

You need to buy bitcoin in a bear market (at a low price) and sell it at a bull market (at a high price).
 
Now that's a good trading strategy!  

If you are selling bitcoins to buy things that are vital to you, then this has nothing to do with trading.  In this case, Bitcoins perform the function of money (monetary, payment function).  

Bitcoin is both an investment asset and money, it can perform both functions.

Yeah statement is quite logical to me because it doesn't matter you are re investing your money there will be a factor of risk present at every investment opportunity. All you have to do is to do your proper study before investing your money. Like if you follow the sequence when you made 10k profit at first investment and you thought you would made another tank a profit in another investment but that's a sequence that you should avoid.

What you should do is to do the same level of study that you have done when you are investing the first time and there is one more factor that investing and trading are two different things so if we are investing then we should have to wait for longer period of time and if we are trading we can see result in lesser time.

Ultimately risk factor and risk management are the main component of investing and trading that we should not avoid even if we made profit in the first try.

There are different types of investment strategies followed by investor so the scenario may have different outcomes depends on what strategy we are following.

For example you made 10K profits which is 100% return so I will cash out the capital alone and let the profit to sit in the wallet for long time so you can utilise the capital on other investments since you have nothing to lose with your crypto investment.

Accumulating more Bitcoin is another strategy and it is more suitable for very long term investment like 5 to 10 years atleast by that time surely you will be in profits.

What you have described is trading or by extension buying and selling and this is normal. If you make profit, you have to try to sustain it by either making more profit or making less losses and by that your profit margin will be rising. So if you have made $10k in your first trade, try to sustain it by buying or selling at appropriate time. You have made a simple and normal analysis on trading, investment and it is normal hodling or selling and rebuying at intervals.

What you are describing is not investment cost but rather you flip-flopping between selling and buying at the wrong times, which eats away your profit in two ways:

the first way is that you obviously get scared of the dump and sell lower than you bought. Then the price rises and you buy again because you think it will continue going up, without you. Repeat process until you have no money.

The second way, which most people underestimate, is you grind away your money with trading fees. 0.1% and 0.1% and again and again until you have grinded away 10% from your repeated and unnecessary back and forth trading.

The only real investment costs should be the withdrawal fees and the one-time buying fee. Thats it. After that you hodl.

And if you are susceptible to panic-selling or panic-buying, then walk away from the computer and distract yourself with something else at least for a few years. Investing into Bitcoin takes discipline.

It's definitely a blindspot that many people have when they come to determining how successful they are at trading and it's a similar effect to what we see with gamblers. There is a tendency to hone in on the few large wins, but overlook the many small losses which often wear down your investments. It is only when you completely cash out that you can judge your profitability, in the scenario you've highlighted, no profit was made by the trader at all - they probably also lost money because the value of what they invested was being inflated away in fiat terms during that timeframe as well. These sort of assets are also not producing anything of value, so you don't naturally get an income from dividends or profit reinvestment like you would with a share of a company.

It's reasonable and make sense to think about that if you're someone not going to go ahead and be long term on trading, buying and selling bitcoin.

There's this worry that someone has to think about and if that's the plan he got on his mind. But to say the least, this is essential in every market and not just on bitcoin.

You go and take profits and if you want to go back again on the market, you can do it freely anytime. What's important is that, you've taken a profit at first and you're able to experience that and it's all up to you whether you want to be part of this very volatile market again and wanna take the risk.

OP, I'm understanding your hypothetical scenario but what I'm not getting is what you're getting at with your question and with statements like the above.

You could ask an infinite number of "what if...?" questions regarding the market, and you'll get infinity+1 number of answers if you start a thread about them--nobody can tell you what the right thing to do in any trading circumstance, because the definition of "right" can vary from trader to trader based on any number of factors.  It sounds like you don't have a lot of experience with markets and trading, am I right?  Well, you're in for a fun ride, but it's one with a very harsh and unforgiving driving instructor, i.e., learning from mistakes.  And you will make them.  If anybody says they've never screwed up a trade, they're lying.

Good luck.

I think there's a line you are missing, if someone buys bitcoin at 20k and then price move to 40k that means is 20k profits you have made from the investment. Although most people don't like altering their investment, some may decides to invest for longer time between the range of 1 year to 4 years while otherwise may chooses to invest from 1 month to 1 years or thereabout but it solely depends on individuals. Whomever that plays such game then he is smart enough to make profit out of his investment, reasoning are different so its to investment some other may think immediately they sells off the price might triple of what they sold by this action they may decides to hodl.

Knowing and doing are quite different. In reality, including on this forum, there are so many people who only emphasize the advantages and good sides of investment but ignore the potential costs(if not risks). I am hoping this can remind people of being realistic ? No big deal.



If you invested $10K and did not sell and waited untial the Bitcoin price reached $100K, what is the point of making profit ? That would only mean profits on paper. You have to cash it to guarantee the real gains. "Selling and buying back at intervals can work when you try to sell at the top and buy back at the bottom, but does not come with guarantees.", actually I am not talking about guarantees and just try to generalize something useful from millions of investors' experiences. Thanks.

That's quite normal! That's the story of evey trader regardless of whether crypto is being traded or stocks. That's why every trader has do depend on the P&L report that they receive from their broker. This P&L reports includes all trades they make and calculate a consolidated profit or loss. That's how it is everywhere and it's quite logical. I am not sure what's so difficult here!

Even when we file our taxes, we have to post a consolidated income report. That's exactly how you can calculate your trades in intervals and determine how much you are making. Simple!

I think they can be avoided if you do not sell at intervals. You can only make a profit or suffer a loss when you sell, so by simply hodling you stand a good chance of making a profit, particularly with an asset like bitcoin.

If the hypothetical investor had only invested $10k of spare money and did not need to sell when the value increased by 100%, they would still hold their $20k at the time. Even if the price drops at intervals, bitcoin has shown to always rise in the long run, so after another bull run or two, the value of 1BTC could be as high as $100k, and they would have a total of $50k, with a profit of $40,000 from their initial investment.

Selling and buying back at intervals can work when you try to sell at the top and buy back at the bottom, but does not come with guarantees.

- Jay -

One question bothers me a long time and I am not sure if there is anyone that thinks about this before. Let's say you invested $10K in Bitcoin when the price was $20K,  and some time later the price pumped to $40K, which means the initial capital is now worth $20K. For some reason, you need cash urgently so you decide to sell the Bitcoin you own for cash. You do it and now you have that $20K on hand.

In this process of trading, your profit is $10K for sure, regardless of whether the Bitcoin price will pump or dump. If you won't invest again, this beautiful success should be what you are proud of. However, 99% of us will choose to buy again and hope for the next success. However, now you buy at $40K and the price may drop to a new low below $20K later, and the profit you gained from last trading may be eaten up gradually by the market dump.

Connect the two dots(two extreme conditions) and draw a curve, high chances are that at last, your profits from all investments may not be that much, at least much less than what you expected when you first gained that $10K. Therefore, all the occasional profits between investments may become fixed or variable costs that these investment must pay.

Does this sound logical to you ? What do you think of all the interval losses from the investment gains ? Please let me know.